Rare whisky returns better than gold

Prices of rare whiskies are on the rise, with the most wanted single malts offering better returns than gold. Lucy Shaw explores whether these old drops are a good long-term investment, or if the bubble might be about to burst.

When it comes to liquid assets, whisky is currently a more solid investment than wine, oil, and even gold. In January, a bottle of Yamazaki 50-year-old single malt set a new record for Japanese whisky sold at auction when it went under the hammer at Sotheby’s in Hong Kong for a tidy £209,740 – double its estimate. As Sotheby’s wine specialist Paul Wong pointed out after the auction, the old and rare whisky market is “in full swing”.

The rare whisky auction market in the UK has smashed the £25 million mark as value sales grew by a staggering 76% last year. Some 83,713 bottles of whisky were sold at auction in Britain last year, achieving an average bottle price of £299, though the top lots sold for much more. Topping the charts was a bottle of 62-year-old Dalmore The Kildermorie – one of only 12 released – which sold for £95,000 at Christie’s in London last December.

“Rare whisky is experiencing a perfect storm of diminishing stocks and skyrocketing demand,” says Andy Simpson, director and co-founder of whisky brokerage Rare Whisky 101. “The rare whisky acquisition landscape has changed forever because the consumer, rather than the retailer, now decides what price they will pay for a bottle of collectable whisky.”

Proving just how hot an investment whisky has become, Rare Whisky 101’s Apex 1000 Index, which tracks the best-performing 1,000 bottles of rare whisky, outperformed both the oil and gold indexes, and also the Liv-ex Fine Wine 100 last year, closing the year up by 27.5%.

Last December alone saw 8,848 bottles of Scotch sold at auction in the UK – nearly half the number of bottles sold throughout 2013. The most sought-after bottles of rare single malt Scotch and rare Japanese whisky are performing equally strongly around the world, though the Chinese market has developed a particular fondness for Japanese whisky.

Exceptional returns There are three types of rare whisky buyer – those who buy to drink, those who buy to collect, and those who buy to sell on the whiskies at a profit. Iain McClune of Whisky Auctioneer believes investing in whisky is a win-win situation. “If you’ve done your research then the return can be exceptional in a very short period, and if the market changes then at least you can drink it,” he says.

Noticing the growing interest in rare whisky at auction, and keen to profit from their own nectar, distilleries have upped the release prices of old bottlings – 50 decanters of Dalmore 50-year-old were released last year at £50,000 a pop to celebrate master distiller Richard Paterson’s 50th anniversary in the whisky industry.

Sukhinder Singh of The Whisky Exchange, says: “The same whisky was released 15 years ago for a few thousand pounds a bottle, and some of those bottles are now on the market for around £35,000. It’s the same with independent bottlings – there is great value to be had with old and rare when compared with new releases.” George Grant, head of one of Scotland’s few family-owned distilleries – Glenfarclas in Speyside – agrees.

“The fact that distilleries have increased their release prices hasn’t slowed down the secondary market; it’s made it grow even faster, and the surge in online auction houses has helped – a lot of people are flipping whiskies soon after they buy them at auction,” he says. While Grant welcomes the growing global interest in whisky, he finds it sad that so many people are now buying whisky to make money from it.

“Whisky has become a tradable commodity like gold or oil, which is sad as it’s meant to be shared and enjoyed with friends. We make it for people to drink,” he says. The fact that whisky doesn’t tend to evolve once bottled, meaning it has a far longer lifespan than wine, is adding to its investment allure. “Whisky is viewed as a much safer investment than wine, and also a more accessible investment for new collectors who can quickly learn the basics about Scotch and Japanese whisky and get involved in buying and selling it online,” says McClune.